Buying a Condominium in Oakville, Mississauga or Burlington - Important Things You Need to Know About Condominium Ownership -Common Expenses and The Status Certificate.
Part One of the 'Buying a Condominium in Oakville, Mississauga or Burlington' series discussed the initial things a buyer should be aware of as they begin to think about looking at condominiums.
A link to Part One can be found at the bottom of this page.
In this article, Part Two of a three part series on things a buyer should be aware of as they begin to consider the purchase of a condominium, we will be looking at 'common expenses' and also talking about the 'status certificate', two very important aspects of condominium ownership.
- Condominium ownership involves the payment of monthly condo fees to the condominium corporation. These fees vary widely from development to development, not only in amount, but also in terms of what they cover.
Monthly fees, also known as common expenses, are used by the condominium corporation to cover such things as maintenance of the common elements, funding the reserve account (see explanation of reserve account below) and paying for the management of the day to day operations of the building/development and the operating expenses of the condominium corporation.
Monthly condo fees may also include, depending on the condominium, such things as snow removal, grass cutting, building insurance (for the exterior of the building), exterior building and grounds maintenance, water usage, utilities and television cable.
Be sure to find out the exact amount of the monthly fees and what they include prior to the submission of an offer to purchase.
If you are working with a REALTOR® , they will attain all of this information for you on each condominium that you are considering.
You should also be aware that if you will be requiring financing for your condo purchase from a bank or mortgage company, the amount of the monthly condo fees will have an impact on how much the lender will be willing to loan you for a mortgage.
If you are considering the purchase of a condo that has not yet been built or is in the process of being built, be aware that the condo fees you will be quoted may rise by up to 50% or more after your first year of ownership. Factor this into your monthly costs when you are determining how much you can afford prior to submitting an offer to purchase.
- One of the most important documents applicable to condominium ownership is the 'Status Certificate'. It is vital that you do not purchase a condominium prior to having your lawyer review the status certificate and go over with you in detail it's contents.
The status certificate will cover the following very significant aspects of the condominium corporation and unit you are considering:
1. The amount held in the 'reserve fund'.
All condominiums are required by law to maintain a separate fund that is allocated for the payment of major repairs and replacements of the common elements of the condo corporation. These may include repair or replacement of windows, roofing, pools, parking, elevators etc.
2. Whether or not the unit you are interested is overdue on any common expense payments.
3. Reveals any liens against the unit you are considering.
4. Provides you with detailed accounting of the most recent audited financial statements and budget of the condominium corporation.
5. Indicates whether there are any special assessments or legal actions involved with the condominium corporation or with the unit.
6. Includes a list of the Board Members of the condominium corporation.
7. Whether or not there are any increases in the monthly fees being contemplated.
8. A copy of the condo corporation's 'Declaration'. The declaration is the legal document that creates the condo corporation. In it you will find a description of the boundaries of your unit and the percentage used for calculating the specific montly expenses/fees for your unit. It will also contain any obligations that affect the use of your unit.
9. The Bylaws of the condominium corporation. The bylaws will outline the organizational and administrative functions and duties of the Board of Directors and the Condominium Corporation. They will also provide a structure for the calling of owner's meetings and for the election of members to the Board of Directors.
10. All condominiums have a set of 'Rules and Regulations'. These will also be included in the status certificate.
Condo rules and regulations set out the standards of behaviour for the condo community.
They will cover such things as the day to day use of the common elements and also of the individual units.
Some condominiums do not allow pets or limit the type and size of pets. If this is the case, it will state so in the rules and regulations.
There are various other stipulations that will be found in the rules and regulations and it is very important for you to review them prior to making a firm offer to purchase.
Your REALTOR® will set out a certain amount of time (usually 10 days), in the offer to purchase, for you and your lawyer to review the status certificate. This is set out in the form of a condition,
thereby allowing you to rescind your offer should you or your lawyer find something of concern when reviewing the status certificate.
For Further Reading:
Buying a Condominium in Oakville, Mississauga or Burlington - Important Things You Need to Know - Part One.
If you are considering buying a condominium in Oakville, Mississauga or Burlington and would like a complete list of condominiums currently available for sale that meet your needs/desires, contact Jo-Anne Smith at OakvilleAndBeyond@gmail.com or 289-837-2132.